Telkom Indonesia, parent of the country’s leading operator Telkomsel, has plans to also become its largest tower operator in the next three to five years, and is looking to acquire a majority stake in a listed tower operator in the first quarter of next year through a share swap.
The operator’s finance director Honesti Basyir said it is working out the required CAPEX for the expansion, but noted the company would need to raise INR5-10 trillion ($427-854 million) in the initial phase by issuing bonds or through loans, the Jakarta Post reported.
He said 40 per cent of the CAPEX would come from external funds. Telkom’s annual CAPEX target is INR20-25 trillion, 65 per cent to 70 per cent of which goes to its mobile unit Telkomsel.
Just over a year ago the company said it was considering selling up to a 49 per cent stake in its tower subsidiary Dayamitra Telkom, better know as Mitratel, so it could focus on its core businesses. Later in the year it talked of selling off its entire stake in the unit leading up to listing Telkomsel (35 per cent owned by SingTel).
Its latest tower ambitions are similar to plans in early 2013 to merge Mitratel with a publicly listed tower company.
The likely target is Tower Bersama Infrastructure, one of the two leading independent tower operators in Indonesia, in which Indosat sold its 5 per cent stake in March for IDR1.93 trillion.
Moody’s recently lowered Bersama’s rating outlook to negative from stable due to the lack of a significant recapitalisation plan.
Nidhi Dhruv, a Moody’s analyst, noted that acquisitions have been central to Bersama’s growth strategy, and Moody’s expects the company to continue to look for acquisitions over the next two to three years as the leading Indonesian operators sell their tower assets and then lease space back from the tower companies on long-term contracts.
“Additional acquisitions would make Bersama the largest independent tower operator in Indonesia — but a substantially debt-funded acquisition would further strain the company’s credit profile and lead to a ratings downgrade,” Dhruv said.
The other major tower player is Nusantara Infrastructure.
Frost & Sullivan expects the country to have 89,409 towers next year – up 8 per cent from this year.
Bersama had 11,266 telecoms sites as of June while Mitratel had about 3,000 towers as of April. Indosat, with an 18 per cent share of mobile connections, has about 34,000 base stations across the country.